11/14/2008 @ 1:50PM

The Party Is Over

Last year Vijay Mallya, India’s self-proclaimed king of good times, was flying high. The liquor tycoon, who is known for his flamboyant lifestyle that includes yachts, vintage cars and a stud farm, closed perhaps the biggest deal of his life. His UB Group, a liquor conglomerate that he’d inherited from his father, had become the world’s second-largest spirits group after its $1.2 billion purchase of Scottish distiller Whyte & Mackay. In the airline business, he scooped up low-cost carrier Air Deccan and merged it with his Kingfisher Airlines to become the country’s biggest domestic carrier. All of this helped Mallya’s net worth climb to $1.6 billion.

But the party is over for now. Mallya’s net worth tumbled to $390 million as his liquor stocks got hit; his main holding, United Breweries (Holdings), is down 87% since its January high. The news could get worse still. It was reported that his airline has defaulted on aircraft lease payments; Kingfisher denied it. He is one of 6 members of last year’s top 40 who failed to make the cut, despite a minimum net worth of $760 million, less than half of last year’s $1.6 billion. Other notable dropoffs include Gautam Thapar, head of India’s largest papermaker, Ballarpur Industries, and president of the Professional Golf Tour of India, and real estate baron Rakesh Wadhawan, whose Housing Development & Infrastructure stock was pounded amid rumors that the company was overstretched.

Economic turmoil makes for strange bedfellows. In October Mallya teamed up with another loser, his onetime rival, Naresh Goyal, whose fortune dropped from $1.55 billion to $350 million this year. His Kingfisher Airlines is partnering with Goyal’s Jet Airways in an unprecedented alliance that includes a code-sharing deal, common ground handling and combining frequent-flier programs. What’s next: a detente between the Ambani brothers?